Indian stocks hit 1-year lows on sustained selling for the 3rd day on Tuesday as overseas funds continued to exit emerging markets. Banks were hit the hardest. Not one Index rose.
Stocks across Asia bore the brunt of overseas selling from foreign funds who are anxious to return back to the US market ahead of the possibility of a rise in interest rates in the US during September.
As a consequence, the Nifty fell 185 points, or 2.33 percent, to 7,785 points, recovering marginally from its intra-day low of 7,749 points. The Index fell for the third day. Bank of Baroda, Punjab National Bank, Kotak Bank, Hindalco and Axis Bank were the top five losers on the
Infosys, Larsen and State Bank of India were the top 3 traded counters on the NSE. All three saw action on the negative side.
Broader indices recorded heavy losses. The CNX 100, CNX 200, CNX 500, CNX Mid Cap, CNX Small Cap and CNX Nifty Junior Indices lost between 1.7 percent and 2.4 percent. The Bank Nifty plunged 3.6 percent, or 616 points, to 16,530. CNX PSU Bank was the worst hit, down 4.4 percent to 3,058. Other Sectorial indices recorded falls of between 1.1 percent and 3.4 percent.
The entire banking sector came under selling pressure on Tuesday after private sector lender HDFC Bank announced a 35 bps cut in its base rate to 9.35 percent.
This move will force rivals to also cut their lending rates at a time when the sector is saddled with a growing problem of non-performing loans and sluggish credit demand.
HDFC Bank said it was passing on the cut in overall rates by the Reserve Bank of India to customers in a bid to boost lending. The base rate is linked to the lending rate of every bank. Rivals such as ICICI Bank and State Bank of India will be forced to replicate this move or else face an exodus of customers.
The bloodshed was equally vicious on the Bombay Stock Exchange, where the Sensex plunged 586 points, or 2.3 percent, to 25,696 points with 29 out of 30 stocks losing ground. Sun Pharma was the lone gainer while
ICICI Bank was the top traded stock on the Sensex.
Bears were in complete control of the wider market where just 600 stocks rose compared with 2,086 that fell.
Meanwhile, front month Nifty futures plunged 208 points to 7,791 in the derivatives space where just 9 futures rose compared with 152 that slipped below Monday's close. United Phosphorous, United Breweries and Ajanta Pharma were major gainers while JSW Energy, PNB, IB Real Estate and Amtek Auto posted substantial losses.
All 18 sectors in the F&O space fell with a rise in Open Interest.
Essar Oil, Grindwell Norton, Rolta India and DCM Shriram made it to the volume buzzers list and Torrent Pharma, Dishman Pharma, D S Kulkarni and Themis hit fresh highs on the NSE.
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